Introduction
The crypto industry hasn’t been treated well in late 2022. Several investors are rethinking their investments in the industry in light of the FTX platform meltdown and the well-publicized devaluations of numerous cryptocurrencies.
The third biggest centralized exchange, FTX, where users may trade a variety of cryptos, recently announced that it has declared bankruptcy. The effects are already being felt widely in the crypto industry which has however led to crypto being surrounded by fear, uncertainty, and distress, some other events like the Terra collapse that have happened this year have also contributed to the current fear surrounding cryptocurrency; amid all these events, you can make a fortune in the crypto market; all you need is the right and experienced market analysts who are watching the market every 24 hours.
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What Led to FXT’s Collapse?
In 2021, FTX exchanged upwards of $700 billion worth of cryptocurrency and had over 5 million users globally. Poor leadership was the main problem. Sam Bankman-Fried, the co-founder of Alameda Research and the creator of FTX, has been surreptitiously siphoning money from FTX. The downfall of FTX was indeed the result of a variety of mistakes since FTX was making investments in considerably higher product categories.
Where next for cryptocurrency after the FTX Collapse?
The trillion-dollar cryptocurrency market is still being shaken by the tremors of the FTX crash. As investor enthusiasm suffers, the values of cryptocurrencies are declining. The value of Ether, the second-most valuable crypto on the planet, dropped by 20 percent recently, while Bitcoin, the largest crypto, has fallen by 65 percent over this year. of the industry for digital currencies is made up of Ethereum (Ether) and Bitcoin.
Concerns about the security of blockchain technology and cryptos have been voiced in response to the bankruptcy proceedings of cryptocurrency behemoth FTX and the decline in the price of Ether and Bitcoin.
The Ongoing Litigation and Arrests
One of the major figures in the cryptocurrency sector, Sam Bankman-Fried, has had a difficult finish to 2022. His formerly $32 billion-valued cryptocurrency exchange, FTX, filed for bankruptcy protection in November 2022, rendering his customers’ and investors’ investments worthless. After the filing of criminal accusations in the United States, he was detained in the Bahamas, where he is now being held without bond as he anticipates being extradited. Charges include breaches of campaign funding laws, money laundering, wire fraud, and securities fraud. Bankman-Fried has been accused of defrauding equities investors by the Securities and Exchange Commission
Bankman-Fried piqued the curiosity of people in business, philanthropy, politics, and other fields before the controversy. He predicted that he may spend up to one billion dollars in the next U.S. election. He claimed to have several ideas for regulating the cryptocurrency market and leveraging his crypto-powered money for the greater good. As the summer’s crypto winter set in, he declared that he wouldn’t mind helping any struggling cryptocurrency businesses. In light of another statement, he made on November 7—namely, that his cryptocurrency exchange, FTX, was “fine”—all of these assertions are now practically useless. Not at all. Rather, the exchange collapsed the following day. Four days later, the business had declared bankruptcy, and the chief exec Bankman-Fried resigned.
The Road Ahead for Crypto
The proof of funds is now being actively verified by several cryptocurrency exchanges, however, they are only available at one point in time. The possibility of monitoring these crypto reserves in real-time ought to be advantageous to investors. Other cryptocurrencies’ valuation has decreased for numerous reasons, including the growing ambiguity surrounding liabilities’ locations and their interconnections with FTX. Regulations are most inclined to be one of the long-term effects. Investors anticipate tough government regulatory standards to safeguard what’s been happening in the cryptocurrency sector. Institutional participants in this arena are anticipated to reevaluate the risks and expectations they have. More damage has been done to consumer confidence in retail.
The realization that a decentralized form of money will soon win and remove the monopoly of the government and the banking industry was crypto’s biggest strength. However, the most recent theft of $370 million from FTX to Alameda has caused many to reconsider the danger associated with investing in the cryptocurrency sector. There will inevitably be a decline in confidence in this industry.
Over time, cryptocurrency has demonstrated itself to be a route to a more just financial system. With the aid of different technological advancements and transparent peer-to-peer lending utilizing blockchain technology, we are developing into a highly effective capitalist system in the autonomous financial system. Authorities in traditional banking industries have a clear understanding of what is going on, but there’s no regulation in the cryptocurrency sector, making it impossible to know what’s going on in the background.
The contagiousness among its participants and investors will force the cryptocurrency market to become stagnant. FTX may be among the first of a few companies that could be severely harmed for many reasons. The only saving grace is that the platform was merely a trading exchange, so the coming months are going to be chaotic. Overall, since the introduction of derivatives ten years or so ago, the democratization of the financial sector has most likely been the finest financial innovation. There’s a great deal of promise, but it needs to be realized properly through sustainable legislation.
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